The Nottingham is moving to a “cost-based self-build and custom-build lending approach” through specialist distributor BuildLoan.
The building society, which distributes its self-build and custom-build mortgages exclusively through BuildLoan – will now provide funding based purely on the costs of each element of a client’s build.
The lender says this takes away the requirement for interim valuations, and with that comes a big reduction in risk of a customer potentially not getting the funds they expected partway through the build.
At the same time as the move to cost-based lending, The Nottingham has also revamped its self-build range. It has reduced the rate of one discount product, added a two-year fee-free discount offering and introduced a new 16-month fixed rate product.
- Its two-year ERC-free discount product with £1,499 fee is now 3.80% (was 3.99%)
- A two-year ERC-free discount product priced at 5.00% is now fee-free (was £499)
- A new 16-month fixed product has been launched at 3.74% (£1,499 fee)
Nikki Warren-Dean (pictured), the Nottingham’s head of intermediary sales, said: “This is a really positive step in the reinvention of our mortgage lending. We know that having the confidence that money will be available exactly when needed as work progresses is hugely important for self and custom builders.
“Our lending is now linked to the cost of each stage of work, with a guaranteed stage release pattern agreed at application. This cuts out the need for interim valuations, taking away the risk of a customer potentially not getting the funds they expected.
“Lending based on build costs alone substantially reduces the risk of cashflow issues bringing a project to a standstill because contractors can’t be paid, or materials purchased.
“There can be no underestimating the peace of mind confirmed cashflow can bring – in fact it can be key to a successful and efficient self-build project.”
The Nottingham has over 170 years of helping put roofs over people’s heads, and Nikki explained how the move into cost based self-build lending plays a role in keeping that in the building society’s DNA.
She added: “We have a long and successful history of helping people find homes for themselves and their families and are continuing with that ethos by supporting people for whom self-build is their preferred option.
“Things such as Right to Build legislation and the Bacon Review have led to self and custom-build being much more talked about these days than they ever were and increasingly being considered by many as viable options.
“We see bringing our lending experience to the table as an added positive – twinned with our traditional values and flexible underwriting.
“The transition to cost-based lending will see our strong working relationship with BuildLoan continue to develop, as we share a determination to support those who want to build their own home.
“With BuildLoan’s understanding of the market and risk mitigation including experienced underwriters, a detailed build cost assessment process, access to indemnity and build-out insurance and post-completion build monitoring and support added to the mix, we’re in a really positive position to help those considering a self or custom build.”
Chris Martin, Head of Product Development and Underwriting at BuildLoan, commented: “These products meet one of the key needs of a self or custom builder – the peace of mind that they are guaranteed to get the funds they need, at the right time, to get their build completed successfully.”